Asia Distillates-Jet fuel cracks post second straight weekly gain
SINGAPORE, (Reuters) - Asian refining margins for jet fuel rose on Friday, posting their second straight weekly increase, amid expectations for winter heating demand for closely related kerosene. Refining margins, also known as crack spreads for jet fuel rose to $14.58 per barrel over Dubai crude during Asian trading hours, up from $14.22 a barrel on Thursday. Winter in the northern hemisphere typically brings peak heating demand for kerosene, which belongs to the same grade of oil products as jet fuel, with jet refining margins determining the profitability of both. The jet fuel cracks have gained 4.7% this week, but they were about 6% lower than their seasonal levels for this time last year, Refinitiv data showed. The market for the aviation fuel has remained under pressure most of this year due to slowing economic activity in the region and the ongoing U.S.-China trade war, which has impacted air freight volumes. "Air cargo's peak season is off to a disappointing start, with (global) demand down 3.5% in October," Alexandre de Juniac, chief executive officer of the International Air Transport Association (IATA) said in a statement this week. Asia-Pacific airlines posted a 5.3% fall in air freight demand in October, compared with the same month a year earlier, according to IATA data. "The U.S.-China and South Korea-Japan trade wars have negatively affected the region. And the disruption to operations at Hong Kong International Airport — the largest cargo hub in the world — continues to impact activity," IATA said. Cash discounts for jet fuel <JET-SIN-DIF> were at 42 cents per barrel to Singapore quotes on Friday, compared with a 36-cent per barrel discount a day earlier. Meanwhile, cash premiums for gasoil with 10 parts per million (ppm) sulphur content <GO10-SIN-DIF> rose for a fifth consecutive session on Friday to $1.04 per barrel to Singapore quotes, compared with 84 cents per barrel on Thursday. Crack spreads for the benchmark 10 ppm gasoil grade climbed to $15.06 per barrel over Dubai crude during on Friday, up from $14.39 per barrel on Thursday. AIR PASSENGER DATA - Global air passenger traffic for October showed demand rose 3.4% compared with the same month a year earlier, a modest slowdown in comparison with a 3.9% growth recorded in September, IATA said on Thursday. - "Traffic growth continues to be depressed compared to historical long-term growth levels, reflecting continued moderating economic activity in some key markets and sagging business confidence," IATA's Juniac said. - Passenger traffic for Asia-Pacific airlines increased 3.8% in October compared with the year-earlier period, lower than the 4% annual growth recorded in September, IATA said. The Asia-Pacific region makes up more than a third of the global aviation market. - Domestic traffic in China rose 5.3% in October, compared to September's 8% growth, while airlines in India posted a rise of 3.6% in domestic traffic, up from 1.9% in September, supported by the start of the main tourist season, IATA said. SHIPPING FUEL PROFITS GROW ON IMO 2020 DEMAND - Asia's oil refiners are starting to see a surge in demand for cleaner fuels that is pushing up processing profits for very low sulphur fuel oil (VLSFO) and gasoil just weeks before new rules take effect for fuel products used in ships. - Refining margins or cracks for VLSFO rose above $20 a barrel this month, while cracks for gasoil with a sulphur content of 10 ppm for January delivery were about $1 higher than those for December, encouraging refiners such as South Korea's Hyundai Oilbank to increase output in January. ARA STOCKS - Gasoil stocks independently held in the Amsterdam-Rotterdam-Antwerp (ARA) refining and storage hub <STK-GO-ARA> rose 0.6% to 2.4 million tonnes in the week to Dec. 5, data from Dutch consultancy Insights Global showed. - ARA jet fuel inventories <STK-JET-ARA> slipped 0.6% to 711,000 tonnes, the data showed. - Compared with a year earlier, jet fuel stocks were 12.5% higher, while gasoil inventories were up 17.3%. TENDERS - Sri Lanka's Ceylon Petroleum Corp (Ceypetco) is seeking term cargoes of 10 ppm and 500 ppm gasoil for delivery over eight months between April-November, 2020. - The tender closes on Jan. 7 and will be valid for 90 days. - For more such information, please click SINGAPORE CASH DEALS - Three gasoil trades, no jet fuel deals. - For more information, please click OTHER NEWS - Disruption to shipping from the long-anticipated switch to more environmentally friendly marine fuels has finally arrived, exacerbated by logistical problems as much as any shortage of the cleaner fuel. - Oil edged lower on Friday as investors awaited a meeting of OPEC and its allies later in the day which is expected to formally agree to more output curbs in early 2020.
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